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SCACPA's Weekly Federal Tax Update

Author: SCACPA Lynn Nichols

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Lynn Nichols has been explaining federal tax law to audiences since 1969. He is now partnering with SCACPA to launch a series of podcasts that answer questions stemming from the Tax Cuts and Jobs Act. He’ll describe in each installment how the actions of the IRS and the U.S. Tax Court affect how you should interpret the tax code. Listen to each new episode, and you’ll better understand how the new tax laws work.
49 Episodes
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Lynn Nichols Federal Tax Update Podcast October, 07 2019, Episode 49 Listen as Lynn Nichols provides commentary on 6 Items pertaining to current developments in U.S. tax law. Lack of Safe Harbor in Proposed Accounting Regs Chafes Tax Pros Practitioners are disappointed by the absence of goods sold offsets and a financial accounting percentage of completion method safe harbor in newly proposed regulations on the Tax Cuts and Jobs Act’s tax accounting provisions. [Tax Notes Today, 9/9/2019, Article by Nathan J. Richman]  Automatic Consent Procedures Issued for Accounting Rule Changes The IRS has issued procedures (Rev. Proc. 2019-37) for obtaining automatic consent to change accounting methods to comply with section 451 and recently released proposed regulations under reg. section 1.451-3 (REG-104870-18) and 1.451-8 (REG-104554-18). [Rev. Proc. 2019-37; 2019-39 IRB 1, 9.6.2019]   IRS Publishes Proposed Regs on Exempt Organization Donor Disclosures The IRS has published proposed regulations (REG-102508-16) updating the section 6033 reporting regulations for tax-exempt organizations to reflect amendments to the provision, including changes regarding donor disclosures under prior guidance. [REG-102508-16; 84 F.R. 47447-47454, 9/10/2019]   IRS Not Responsible for Paying Return Preparer’s Fee from Refund The Court of Federal Claims dismissed for lack of jurisdiction a return preparer’s suit alleging that the government must pay the tax return preparation fee his client promised to pay from his refund, because the IRS must remit tax refunds to the taxpayer, not the tax return preparer, and is not bound by the agreement with his client. [Prakash Narayan; No. 1:19-cv-00442, 9/5/2019]   IRS Built-In Gain and Loss Rules Eliminate a Safe Harbor Option Proposed regulations that limit a corporation’s losses following a change in ownership could be more restrictive for some companies by eliminating an option for computing built-in gain and loss. [Tax Notes Today, 9/10/2019, Article by Emily Foster]      IRS Publishes Proposed Regs on Built-In Gain and Loss The IRS has published proposed regulations (REG-125710-18) on the items of income and deduction that are included in the calculation of built-in gains and losses under section 382. Comments and hearing requests are due by November 12.      [REG-125710-18; 84 F.R. 47455-47473, 9/10/2019]     Audits of Partnerships That Cease to Exist Could Have Odd Results Partners who were owners of an entity just before it ceased to exist could be on the hook for adjustments related to other partners who exited the scene earlier, under the centralized audit regime. [Tax Notes Today, 9/11/2019, Article by Eric Yauch]   Student Liable for Taxes After Winning Car for Good Grades The Tax Court, in a designated order, held that the value of a car that a high school student won when she was entered in a drawing for students with good grades and attendance was includable in her income and she is liable for a tax deficiency, finding that the value of the car was not excludable as a gift under section 102 or as a prize under section 74. [Alejandra Conyers; No. 13969-18, 9/11/2019]
Lynn Nichols Federal Tax Update Podcast September, 26 2019, Episode 48 Listen as Lynn Nichols provides commentary on 6 Items pertaining to current developments in U.S. tax law. IRS Explains Deductibility of Contribution to Retirement Plan In a legal memorandum, the IRS advised that for an employer’s contribution to the trust of a qualified retirement plan to be deductible in the tax year it is made, the contribution must be a payment or cash, a cash equivalent, or property. [ILM 201935011, 8/15/2019] [Don E. Williams Co. v Commissioner, 429 U.S. 569 (1977)   Vacation Rentals Can’t Be Used to Deduct Losses, Court Holds A real estate professional and his spouse couldn’t lump in three vacation rentals with other rental properties in trying to claim non-passive losses. [Tax Notes Today, 9/4/2019. Article  by Stephanie Cumings] Resort Properties Not Part of Rental Activity for Passive Losses A U.S. district court held that a couple that included a real estate professional wasn’t entitled to group their resort properties with other real estate properties as a single rental activity for purposes of section 469, finding that the management companies with whom they had agreements didn’t have a continuous or recurring right to use the properties. [Greg A. Eger; USDC N CA, No. 4:18-cv-00199, 8/30/2019]   Denial of Innocent Spouse Relief Upheld; Collection May Proceed The Tax Court held the IRS properly determined in a collection case that a wife wasn’t entitled to innocent spouse relief, finding that she doesn’t meet the criteria for equitable relief under section 6015 because she failed to show sufficient economic or health hardship, and there was evidence she knew or should have known of the unpaid liabilities. [Melinda Jean Welwood; No. 17254-17L; T.C. Memo. 2019-113, 9/4/2019] Treasury Issues Proposed Regs on TCJA Accounting Rule Changes Treasury has released proposed regulations governing how businesses recognize income and treat advance payments. [Tax Notes Today, 9/6/2019, Article by Stephanie Cumings and Kristen Parillo] Proposed Regs Address Treatment of Advance Payments The IRS has published proposed regulations (REG-104554-18) on the timing of income inclusion under section 451 of advance payments for goods, services, and other items, reflecting changes made by the Tax Cuts and Jobs Act. Proposed Tax Accounting Regs Address Timing of Income Inclusion The IRS has published proposed regulations (REG-104870-18) on the timing of income inclusion under section 451 to reflect changes made by the Tax Cuts and Jobs Act. [9/5/2019]   Motorcycle Dealership’s Challenge to Penalties Will Proceed A U.S. district court held that there is a genuine dispute of material fact regarding whether a motorcycle dealership intentionally disregarded its filing requirements in its suit challenging penalties imposed against it for failing to report transactions involving more than $10,000 in cash but held that it cannot obtain reasonable cause relief to avoid the penalties. [ Mycles Cycles Inc.; USDC S CA, No. 3:18-cv-00314, 9/4/2019]   Couple Gets Litigation Costs After IRS Error The Tax Court granted a couple litigation costs after they received an erroneous SSA-1099 that the IRS refused to acknowledge as false despite proffered evidence until the Taxpayer Advocate Service intervened, leading the IRS to reverse its position; the court held that it lacks authority to adopt a rule proposed by the couple for situations of this nature. [ David K. Wagstaff et vir; No. 22658-17; T.C. Memo. 2019-114; 9/5/2019]
Lynn Nichols Federal Tax Update Podcast September, 12 2019, Episode 47 Listen as Lynn Nichols provides commentary on 6 Items pertaining to current developments in U.S. tax law. Individual Can Rollover Deceased Husband's IRA The IRS ruled that an individual could rollover her deceased husband’s IRA into one or more IRAs in her name and that she would not be required to include in gross income any portion of the proceeds distributed from the decedent’s IRA that is timely rolled over into IRAs set up and maintained in her name. [ LTR 201934006, 5/30/2019, rel. 8/23/2019]   Horse Business Deductions Can’t Survive Dead Horse A taxpayer claiming losses from a horse breeding and showing enterprise was either too early or too late to claim it was a business in a year when she didn’t actually own a horse. [Tax Notes Today, 8/27/2019, Article by Nathan Richman]        Settlement Was Income; No Deduction for Horseless Horse Activity   The Tax Court held that an individual should have reported as income a settlement she received from her homeowners’ association, finding that it wasn’t excludable under section 104, and that she couldn’t claim deductions for her horseless horse breeding/showing activity; also, she wasn’t entitled to home office or legal expense deductions for her IT business.      [Denise Celeste McMillan; No. 16203-13; T.C. Memo. 2019-108, 8/26/2019]   Passthrough Interest Expense Wasn’t Investment Interest The Tax Court held that the interest expense passed through to an individual from partnership interests he received by gift or bequest from his father wasn’t investment interest subject to limited deductibility under section 163(d) but was allocable to the partnerships’ real estate assets to offset passthrough real estate income. [William C. Lipnick; No. 1262-18; 153 T.C. No. 1, 8/28/2019]     Photocopied Forms Aren’t Subject to Frivolous Return Penalties The Tax Court held an individual liable for one instead of seven $5,000 frivolous return penalties, finding that copies of the frivolous return that she attached to six separate letters to the IRS did not constitute filing “what purports to be a return” under section 6702(a)(1); the court further held that the IRS complied with the written supervisory approval requirements. [ Gwendolyn L. Kestin; No. 18254-17L; 153 T.C. No. 2, 8/30/2019]   Couple Can’t Claim Education Credit for Daughter for a Fifth Year The Tax Court, in a summary opinion, held that a couple wasn’t eligible to claim the American opportunity tax credit for their daughter’s college education expenses because the credit is only allowed for the first four years of post-secondary education and they had claimed the credit for their daughter in the previous four tax years. [ Milton H. Thomas II et ux.; No. 21655-17S; T.C. Summ. Op. 2019-24, 8/26/2019]   Couple Can’t Rely on Tax Code to Recoup Loan to Son’s Ex A couple who loaned their son’s fiancé money to pay off her student loans can’t use the tax code’s definition of a qualified education loan to get their money back from her bankruptcy estate.   [Tax Notes Today, 8/28/2019, Article by Stephanie Cumings]
Lynn Nichols Federal Tax Update Podcast September, 5 2019, Episode 46 Listen as Lynn Nichols provides commentary on 5 Items pertaining to current developments in U.S. tax law. Solving the Problem of ‘Substantially All’ in the O-Zone Rules In news analysis, Marie Sapirie attempts to parse the differences in the term “substantially all,” as the same phrase in the same statute has two different numerical thresholds. [Tax Notes Today, 8/19/2019, Article by Marie Sapirie}     Timber, Lumber Companies' Value Determined for Gift Tax Purposes The Tax Court, adopting the report of an estate’s valuation expert and rejecting the IRS’s expert valuation, determined the value of limited partnership units in a timber company and determined the value of stock in a lumber manufacturing company for gift tax purposes. [Estate of Aaron U. Jones et al., T.C. Memo. 2019-101, 8/19/2019]     Couple’s Rental Real Estate Loss Disallowed as Passive The Tax Court sustained the IRS’s disallowance of a couple’s rental real estate loss as a passive activity loss, finding that neither of them performed more than 750 hours individually in a real estate activity during the year; therefore, neither of them qualified as a real estate professional under section 469(c)(7)(B). [Ronnie Hairston et ux.; T.C. Memo. 2019-104, 8/20/2019]     Default on Retirement Plan Loan Caused Deemed Distribution The Tax Court in a summary opinion held that a couple received a deemed distribution from the husband’s retirement plan when he defaulted on a loan from the plan despite later resuming payments, finding that the grace period had expired and he failed to cover the missed payments. The court also noted that there is no hardship exception to the section 72(t) additional tax. [Gerard J. McEnroe et ux.; T.C. Summ. Op. 2019-21, 8/20/2019]     Proposed Regs Published on Maximum Value of Employer-Provided Vehicles The IRS has published proposed regulations (REG-101378-19) regarding special valuation rules for employers and employees to use in determining the amount to include in an employee’s gross income for personal use of an employer-provided vehicle. [REG-101378-19; 84 F.R. 44258-44262,8/22/2019]
Lynn Nichols Federal Tax Update Podcast August, 21 2019, Episode 45 Listen as Lynn Nichols provides commentary on 4 Items pertaining to current developments in U.S. tax law. Eighth Circuit Affirms Denial of Innocent Spouse Relief The Eighth Circuit, in an unpublished per curiam opinion, affirmed a Tax Court decision that sustained the IRS’s denial of an individual’s request for innocent spouse relief under section 6015, finding that the Tax Court didn’t abuse its discretion. [Brian Benson v. Commissioner; CA 3, No. 18-3526, 8/2/2019]  Husband Loses Innocent Spouse Claim . . . a husband whose wife was convicted of criminal fraud is not relieved from joint and several liability stemming from their jointly filed tax return, finding that their tax liability wasn’t attributable to an understatement of tax and that he knew his wife couldn’t pay the liability nor would he suffer economic hardship if he paid.  [Brian Benson,. T.C. Memo 2018-157, 9/19/2018]   Misclassification Under HRA Regs Could Trigger Excise Tax Running afoul of the worker classification requirements in new health reimbursement arrangement regulations could lead to additional taxes, according to an IRS official. [Tax Notes Today, 8/7/2019, Article by Stephanie Cumings]   Mayo Clinic Is Educational Organization, Gets $11.5 Million Refund A U.S. district court granted the Mayo Clinic an $11.5 million tax refund, holding that Mayo is an educational organization under section 170(b)(1)(A)(ii) and that reg. section 1.170A-9(c)(1) exceeds statutory authority by adding primary-function and merely-incidental tests that Congress didn’t intend to include in the statute. [Mayo Clinic et al.; USDC Minn., No. 0:16-cv-03113. 8/6/2019]     Couple Penalized for Early Distribution to Make Home Down Payment The Tax Court, in a summary opinion, held that a couple must include in income an early distribution the wife received from her section 401(k) retirement plan to use for a down payment on their first home and held them liable for the section 72(t) additional tax because the distribution wasn’t from a type of plan that is excepted from the additional tax. [Lily Hilda Soltani-Amadi; No. 2090-18S; T.C. Summ. Op. 2019-19; 8/8/2019]
Lynn Nichols Federal Tax Update Podcast August, 16 2019, Episode 44 Listen as Lynn Nichols provides commentary on 4 Items pertaining to current developments in U.S. tax law. Extension Granted to File S Corp Asset Disposition Election The IRS granted an extension for a limited liability company to make a section 336(e) election regarding the LLC’s acquisition of the stock of an S corporation from an S corporation shareholder. [LTR 201930001, 4/29/2019, rel. 7/26/2019]   S Corporation’s Reorganization Won't Trigger Gain The IRS ruled that an S corporation whose shareholders disagreed over the business operation could form two new S corporations and contribute half of the assets to each in liquidation of the parent company without triggering gain and that the earnings and profits and accumulated adjustment accounts of the new companies will be allocated under section 312(h). [LTR 201930011, 4/30/2019, rel. 7/26/2019]   Guidance Issued on Making, Revoking Bonus Depreciation Elections The IRS has issued guidance (Rev. Proc. 2019-33) that allows a taxpayer to make a late election, or to revoke an election, under section 168(k) for some property acquired by the taxpayer after September 27, 2017, and placed in service by the taxpayer during its tax year that includes September 28, 2017.  [Rev. Proc. 2019-33; 2019-34 IRB 1, 7/31/2019]   IRS Updates Practice Unit on Income Sourcing for TCJA Changes The IRS updated a prior international practice unit on how the sourcing rules apply to nonresident aliens to incorporate changes made by the Tax Cuts and Jobs Act for tax years beginning after December 31, 2017. [USB/C/014_02_01-05, 7/31/2019]
Lynn Nichols Federal Tax Update Podcast August, 01 2019, Episode 43 Listen as Lynn Nichols provides commentary on 8 Items pertaining to current developments in U.S. tax law. IRS Makes Few Changes in Final Rule on 501(c)(4) Notifications Final regulations explaining how organizations should notify the IRS of their intent to operate as section 501(c)(4) social welfare entities are almost unchanged from the temporary and proposed regs and generally reject recommendations from the public. [Tax Notes Today, 7/22/2019, Article by Fred Stokeld]   Deemed Distribution Requires Downward Basis Adjustment In partially redacted technical advice, the IRS concluded that a deemed distribution of a partnership interest in an assets-over merger of two partnerships is considered an exchange that requires a mandatory downward basis adjustment under section 743(b) when the resulting partnership has a substantial built-in loss. [TAM 201929019, 4/30/2019, rel., 7/19/2019]   LB&I Division Announces 6 New Compliance Campaigns The IRS Large Business and International Division has approved six new compliance initiatives that were identified through LB&I data analysis and suggestions from IRS employees. [LB&I Div. Announcement on July 19,2019]   IRS Working on Guidance for Applying SALT Cap to Passthroughs Treasury and the IRS are developing proposed rules on the application of the $10,000 cap on the state and local tax deduction to passthroughs, and practitioners fear the guidance will seek to invalidate an emerging SALT cap workaround. [Tax Notes Today, 7/23/2019, Article by Amy Hamilton] 110,000 Entities Participate in Connecticut SALT Cap Workaround  About 110,000 passthroughs are participating in Connecticut’s workaround to the $10,000 cap on the state and local tax deduction featuring an entity-level tax and offsetting state credit for members, according to Revenue Commissioner Scott Jackson. [Tax Notes Today, 7/26/2019, Article by Amy Hamilton]   IRS Reminds Tax Pros of Data Security Plan Requirement The IRS has reminded (IR-2019-131) professional tax return preparers that federal law requires them to create a written information security plan to protect their clients’ data. This release is one in a series of the "Tax Security 2.0 -- Taxes-Security Together" campaign. [IR-2019-131, 7/23/2019] Practitioners in Tight Spot on Self-Charged Interest The government punted on the treatment of self-charged interest in the proposed business interest limitation regulations, forcing practitioners to take a best guess on its treatment without authority to rely on. [Tax Notes Today, 7/26/2019, Article by Eric Yauch]   IRS Gives Eligible Partnerships Extension to File Return The IRS has issued guidance (Rev. Proc. 2019-32) granting an extension to eligible partnerships to file a superseding Form 1065, “U.S. Return of Partnership Income,” and furnish a corresponding Schedule K-1 (Form 1065), “Partner’s Share of Income, Deductions, Credits, etc.,” to each of its partners. [Rev. Proc. 2019-32; 2019-33 IRB 1, 7/25/2019] Worker Wins Damages After Employer Sends False Information to IRS A U.S. district court, in a broader breach of contract case, awarded damages under section 7434 to an employee who claimed her employer submitted false information to the IRS by classifying her as an independent contractor rather than as an employee. [Valerie Vanderbilt v. Boat Bottom LLC, et al.; USDC S FL Key West Div.,             No. 4:18-cv-10261]
Lynn Nichols Federal Tax Update Podcast July, 11 2019, Episode 42 Listen as Lynn Nichols provides commentary on 9 Items pertaining to current developments in U.S. tax law. Trustee-to-Trustee Transfer IRAs Are Inherited IRAs The IRS ruled that four beneficiary IRAs created by trustee-to-trustee transfers constitute inherited IRAs under section 408(d)(3)(C), they aren’t considered taxable distributions or attempted rollovers, and the IRAs may be maintained separately for required minimum distribution purposes under section 401(a)(9). [LTR 201924013, 3/15/2019, rel. 6/14/2019] JCT Provides Overview of EO Transportation Benefit Rules The Joint Committee on Taxation, in a June 14 report (JCX-25-19), summarized rules on tax-exempt organizations’ unrelated business taxable income from disallowed transportation-related fringe benefits, in advance of a House Ways and Means Oversight Subcommittee hearing. [JCT-25-19, 6/14/2019] TCJA Regs Have Partnerships Rethinking Guaranteed Payments It turns out that being guaranteed money from a business isn’t always a good thing. [ Tax Notes Today, 6/18/2019, Article by Eric Yauch] IRS Says There’s No Such Thing as a Free Lunch Alex Smith analyzes a recently released technical advice memorandum on employer-provided meals and explores the importance of substantiating the value of those meals when excluding them from employees’ income. [Tax Notes Today, 6/19/2019, Article by Alex Smith] IRS Publishes Proposed Regs on Passthrough Deduction for Cooperatives The IRS has published proposed regulations (REG-118425-18) on the section 199A deduction for qualified business income for cooperatives and on the deduction for domestic production activities for specified agricultural and horticultural cooperatives. [REG-118425-18; 84 F.R. 28668-28706, 6/19/2019] Draft Passthrough Deduction Guidance Outlines Wage Calculation Methods The IRS has issued (Notice 2019-27) a proposed revenue procedure that provides computational guidance on how to calculate W-2 wages for purposes of section 199A(g) and under simultaneously issued proposed regulations (REG-118425-18) on the passthrough deduction for cooperatives. [Notice 2019-27; 2019-28 IRB 1, 6/18/2019] Eleventh Circuit Reverses Denial of Refund Under Claim of Right The Eleventh Circuit reversed a district court decision that denied an individual’s tax refund under the claim of right doctrine stemming from a deduction she claimed for a payment she made to her former husband to return money they jointly treated as income, finding that the requirements of section 1341 were met. [Nora L. Mihelick v. United States; CA 11, No. 17-14975, 6/18/2019] IRS Updates FAQ on QBI Deduction The IRS has updated a prior list of frequently asked questions on the section 199A deduction for qualified business income that was created by the Tax Cuts and Jobs Act. [FAQ, 6/18/2019] IRS Doesn’t Want to Pick Audit Reps, but It Can The IRS has the authority to select partnership representatives for audits in some cases, but that doesn’t mean it’s something they’re eager to do.  [Tax Notes Today, 6/21/2019, Article by Erich Yauch]
Lynn Nichols Federal Tax Update Podcast June, 04 2019, Episode 41 Listen as Lynn Nichols provides commentary on 8 Items pertaining to current developments in U.S. tax law. Partnerships Can Defer Section 1231 Gain Under O-Zone Rules Partnerships are allowed to defer capital gains under section 1231 at the entity level to take advantage of the Opportunity Zone program, according to a Treasury official. [Tax Notes Today, 5/13/2019, Article by Eric Yauch] IRS Disciplinary Office Targets High-Risk Practitioners The IRS Office of Professional Responsibility is focusing on practitioners deemed tax noncompliant and those assessed return preparation penalties for disciplinary action. [Tax Notes Today, 5/13/2019, Article by Jonathan Curry] Tax Court Moves to Allow Limited Representation The Tax Court hopes its new move to allow limited entries of appearance by practitioners will be helpful to pro se litigants. [Tax Notes Today, 5/13/2019, Article by Andrew Velarde]     Tax Court Issues Order, Form on Limited Appearances The Tax Court issued an administrative order and sample form to permit admitted practitioners to enter a limited appearance at scheduled trial sessions beginning in the 2019 fall term.      Tax Court Provides FAQ on Limited Appearance Procedures The Tax Court released a list of frequently asked questions on procedures that permit admitted practitioners to enter an appearance on behalf of petitioners that is limited to specific dates during a scheduled trial session. Tax Court Holds IRS Notice Can’t Overturn Statute’s Plain Language The Tax Court held that Medicaid waiver payments were not excludable from gross income under section 131 based on the plain language of the statute and an IRS notice could not reclassify the payments to deprive a couple of the earned income tax and additional child tax credits they claimed. [Mary K. Feigh et vir v. Commissioner; No. 20163-17; 152 T.C. No. 15] Tenth Circuit Affirms ESOP Participants Were Related Persons The Tenth Circuit affirmed a Tax Court decision that held the shareholders in an S corporation liable for deficiencies based on its finding that the S corporation and employees that participated in its employee stock ownership plan were related persons under section 267, so payroll expenses that accrued were not deductible until they were paid to employees. [Steven M. Petersen et ux. et al. v. Commissioner; No. 17-9003; No. 17-9004]   Sixth Circuit Affirms Estate, Widow Liable as Transferees The Sixth Circuit affirmed a Tax Court decision that held an estate and a decedent’s widow liable as transferees for a bowling alley business’s unpaid income taxes stemming from the sale of the business in a midco transaction, finding that the Tax Court properly refused to respect several features of the form of the transaction. [Billy F. Hawk Jr., GST Non-Exempt Marital Trust et al. v. Commissioner; No. 18-1534]   Eleventh Circuit Upholds IRS Summonses for Attorney’s Bank Records The Eleventh Circuit, in an unpublished per curiam opinion, affirmed a district court’s decision refusing to quash IRS summonses issued to a bank for an attorney and his law firm’s account records, finding that the arguments were rejected in a prior opinion in a related case that also sought to quash an IRS summons. [Michael R. Presley et al. v. United States; No. 18-15091] Judge Upholds John Doe Summons on Law Firm A Texas law firm failed to persuade a federal judge that the IRS abused the John Doe summons process by requesting information on clients who used the firm’s services to set up offshore accounts and entities. [Tax Notes Today, 5/17/2019, Article by Kristen Parillo] John Doe Summons Enforced for Information on Law Firm’s Clients A U.S. district court granted the government’s petition to enforce an IRS John Doe summons issued to a law firm for information regarding clients who used the firm to set up foreign accounts and foreign entities to conceal taxable income, rejecting the firm’s abuse of process argument and its blanket assertion of the attorney-client privilege. [Taylor Lohmeyer Law Firm PLLC v. United States; No. 5:18-cv-01161]
Lynn Nichols Federal Tax Update Podcast May, 22 2019, Episode 40 Listen as Lynn Nichols provides commentary on 7 Items pertaining to current developments in U.S. tax law. Court Affirms Discharge of Accrued Interest on Student Loan Debt A U.S. district court affirmed a bankruptcy court decision that held that requiring a debtor to pay the accrued interest on her student loan debt would create an undue hardship and the interest should be discharged, holding that there was no error in the court’s finding that she would not be able to repay the loan and could eventually suffer significant tax consequences. [Educational Credit Management Corp. v. Vicky Jo Metz; USDC KS, No. 6:18-cv-01281; 5/2/2019]   IRS Rules Stock Repurchase Rules Doesn’t Ruin S Corp Status The IRS ruled that an S corporation’s agreement allowing the business to repurchase the company’s stock if a stockholder is terminated would not be considered in determining whether the corporation’s shares of stock confer identical rights to shareholders. [LTR 201918013, 11/16/2018. Rel., 5/3/2019]   Eleventh Circuit Affirms Denial of S Corp Shareholder’s Losses The Eleventh Circuit affirmed a Tax Court decision that upheld the IRS’s reduction of an S corporation shareholder’s losses because he didn’t establish a bona fide indebtedness that ran directly to him, finding that his back-to-back loan and incorporated pocketbook arguments didn’t show a bona fide debt through other entities in which he held interests. [Homero F. Meruelo; No. 18-1190, 5/6/2019]   My Boss Told Me Not to Pay' Rejected in Trust Fund Penalty Case The Eleventh Circuit affirmed that an individual who was CFO and president of two companies was liable for trust fund recovery penalties for failing to pay the companies’ trust fund taxes, rejecting his “my-boss-told-me-not-to-pay” argument and holding that the argument doesn’t work even when a government agency receiver told him not to pay the taxes. [Steven J. Myers v. United States; No. 18-11403, 5/7/2019]   IRS Reveals Focus of Upcoming Benefit Plan Audits The IRS expects to roll out new audits of several employee benefit plans this summer, including tax-sheltered annuity, tax-exempt deferred compensation, and employee stock ownership plans, according to an official. [Tax Notes Today, 5/9/2019. Article by Stephanie Cumings]   IRS Provides 2019 Maximum Value of Employer-Provided Vehicles The IRS has announced (Notice 2019-34) the maximum value of employer-provided vehicles first made available to employees for personal use in 2019 for which the vehicle cents-per-mile valuation or the fleet-average valuation rules may apply. For use with either rule, the maximum value is $50,400. [Notice 2019-34; 2019-22 IRB 1, 5/8/2019]   IRS Ruling Addresses Terminated S Corp Stock Redemption The IRS has ruled on the tax treatment of a stock redemption by a terminated S corporation, saying that specific accounts must be offset by the amount of the proceeds, with any remainder treated as a dividend. [Tax Notes Today, 5/10/2019, Article by Eric Yauch] Guidance issued on S Corp Distribution in Post-Termination Period The IRS ruled (Rev. Rul. 2019-13) that if, during a former S corporation’s post-termination transition period, the corporation makes a section 301 cash distribution to redeem a shareholder’s stock, the corporation should reduce its accumulated adjustments account to the extent of the proceeds of the redemption. [Revenue Ruling 2019-13, 5/9/2019]
Lynn Nichols Federal Tax Update Podcast May, 03 2019, Episode 39 Listen as Lynn Nichols provides commentary on 4 Items pertaining to current developments in U.S. tax law. IRS Official: Good Recordkeeping Protects Against Bad Clients Documentation can save practitioners whose clients ignore their advice and apply for tax-exempt status, even when they know they don’t qualify, according to an IRS Office of Professional Responsibility official. [Tax Notes Today; 4/29/2019, Article by Kristen Parillo]   IRS Grants Tax Exemption to Massachusetts-Based Satanic Temple   The Satanic Temple, a self-described nontheistic religious satanic organization based in Massachusetts, has been recognized as a church and granted tax-exempt status by the IRS. [Tax Notes Today; 4/29/2019, Article by Paige Jones]   Tenth Circuit Affirms Liability for Penalty for Overvaluing Easement The Tenth Circuit affirmed a Tax Court decision that held a couple liable for a gross valuation misstatement penalty for overstating the value of a conservation easement donation and that held they weren’t entitled to deductions under section 1341 for the repayment of proceeds they received for the sale of state tax credits. [John L. Roth; CA 10, No. 18-9006, 4/29/2019]   Collection Action Sustained Against Food, Wine Festival Operator The Tax Court held that an IRS settlement officer didn’t abuse her discretion in rejecting a hospitality management company’s proposed installment agreement and sustaining the proposed collection action for $1.4 million in tax liabilities, finding that the company wasn’t in compliance with its current employment tax deposit obligations. [Coastal Luxury Management Inc.; No. 24206-16L; T.C. Memo. 2019-43, 4/29/2019] Extended notes coming soon.
Lynn Nichols Federal Tax Update Podcast April, 26 2019, Episode 38 Listen as Lynn Nichols provides commentary on 4 Items pertaining to current developments in U.S. tax law. 2 Percent S Corp Shareholder May Deduct Insurance Premiums In a legal memorandum, the IRS concluded that an individual who is a 2 percent shareholder of an S corporation under the attribution of ownership rules is entitled to the section 162(l) deduction for amounts paid by the S corporation under a group health plan for all employees and included in the individual’s gross income, if some requirements are met. [ILM 201912001; 12/21/2018, rel. 3/22/2019]   Man May Deduct Some Litigation Costs for Suits Against Ex-Wife A man suing his ex-wife over various debts can deduct some of those legal fees because the underlying claims involved investment opportunities, according to the Tax Court. [Tax Notes Today; 4/16/2019, Article by Nathan Richman]     Individual May Deduct Some Legal Fees After Suing Former Spouse The Tax Court, sustaining penalties, held that an individual can’t deduct legal fees under section 162 stemming from lawsuits against his former spouse but some are deductible under section 212, finding that he wasn’t engaged in a trade or business from which he claims the expenses originated but that he did engage in the purported business with the intent of generating a profit.     [Ames D. Ray; No. 14052-16; T.C. Memo. 2019-36, 4/15/2019]   Flour Milling Company Denied Increased Research Activity Credit A company in the business of milling and selling wheat flour was not eligible for section 41 increased research activity credits because no projects met all the requirements to constitute qualified research; however, the company had relied in good faith on its accountants' advice and was not liable for accuracy-related penalties under section 6662. [Siemer Milling Company; No. 21655-15; T.C. Memo. 2019-37, 4/15/2019]   Ninth Circuit Holds Regs Valid, Nixing Mailbox Rule Taxpayers can’t rely on the common law mailbox rule to prove the timely filing of a refund claim, according to a circuit court decision. [Tax Notes Today; 4/17/2019, Article by Emily Foster] [Ninth Circuit Favors Regs Over Mailbox Rule as Refund Suit Heads for Dismissal The Ninth Circuit, reversing and remanding a refund case for dismissal, held that a lower court erroneously applied the common-law mailbox rule to conclude that a couple’s amended return had been timely filed, finding instead that section 7502 and its regulations provide the exclusive means to prove delivery of a tax return to the IRS.      [Howard L. Baldwin et ux.; CA9, No. 17-55115; No. 17-5535]
Lynn Nichols Federal Tax Update Podcast April, 18 2019, Episode 37 Listen as Lynn Nichols provides commentary on 6 Items pertaining to current developments in U.S. tax law.  IRS Explains Negative Tax Basis Capital Reporting Requirement The IRS has responded to taxpayer concerns about a new partnership reporting requirement by providing definitions and real-world examples of what’s required to be handed over to partners, but some practitioners are surprised by the clarifications. [Tax Notes Today; 4/8/2019, article by Eric Yauch]   IRS Denies Exemption to Organization Formed to Support Accident Victim The IRS denied tax-exempt status to an organization established to raise funds for an accident victim and his family because the organization is serving private rather than public purposes. [LTR 201911008, 12/20/2018, rel. 3/15/2019]   (a) IRS Revises Practice Unit on Tax Home Determination The IRS has revised a prior international practice unit on tax homes for purposes of section 911 to provide its staff with explanations of general international tax concepts and information about specific types of transactions.   (b) Practice Unit on Interest Capitalization Revised for TCJA Changes The IRS has revised a prior practice unit to reflect changes made by the Tax Cuts and Jobs Act on the section 263A(f) requirement to capitalize interest if a taxpayer produces designated property, identifying taxpayers subject to section 263A(f) and the steps for determining how much interest must be capitalized to the basis of designated property.   Practice Unit on Construction Industry Accounting Methods Revised The IRS has revised a prior practice unit, incorporating changes made by the Tax Cuts and Jobs Act, on land developers’ and subcontractors’ use of the completed contract method of accounting or the percentage of completion method for long-term contracts in the construction industry.   Business Consultant’s Travel Expense Deductions Denied The Tax Court, sustaining accuracy-related penalties, held that a consultant who operated a concierge chief financial officer business wasn’t entitled to claim travel expense deductions under section 162, finding that his tax home was in New Jersey, where he had a three-year contract with a client, and not Atlanta where he and his family had a home. [Michael E. Brown; No. 21096-15; T.C. Memo. 2019-30, 4/8/2019]   Tax Court Lacks Jurisdiction to Hear Suspended Corporations’ Cases The Tax Court held that it lacked jurisdiction to hear deficiency challenges by two corporations because the state of California had suspended their corporate rights prior to the filing of the petitions and that the revival of their corporate rights was beyond the time allotted to file a petition once a deficiency notice is received. [Timbron International Corp. et al. T.C. Memo. 2019-31, 4/8/2019]   Fact Sheet Outlines Section 199A Deduction The IRS has released a fact sheet (FS-2019-8) outlining the new section 199A deduction, which allows varying deduction amounts for qualified business income, qualified real estate investment trust dividends, and qualified publicly traded partnership income. [FS-2019-8; 4/11/2019]
Lynn Nichols Federal Tax Update Podcast March, 27 2019, Episode 36 Listen as Lynn Nichols provides commentary on 4 Items pertaining to current developments in U.S. tax law.  Supporters of Clergy Housing Allowance Savor Court Win Supporters of a long-standing clergy housing tax preference are breathing easier now that the provision has survived a court challenge over its constitutional [Tax Notes Today; 3/18/2019, Article by Fred Stokeld] Seventh Circuit Holds Housing Allowance Exclusion Constitutional The Seventh Circuit reversed a district court decision and held constitutional section 107(2), which allows ministers to exclude from income a housing allowance paid to them as part of their compensation, finding that the exclusion doesn’t violate the Establishment Clause. [Annie Laurie Gaylor et al. v. Steven T. Mnuchin et al.; No. 18-1277; No. 18-1280, 3/15/2019]   Group Representing Auto Service Shops Denied Exemption The IRS denied tax-exempt status to an organization seeking exemption as a business league because it operates primarily to help its independent auto service shop members obtain competitive supply pricing rather than helping the independent auto service industry as a whole. [LTR 201907007; 9/10/2018, rel. 2/15/2019]   AND ANOTHER CASE IN WHICH EXEMPT STATUS IS REVOKED  Baseball Team Loses Exemption The IRS revoked the tax-exempt status of an organization established to support a baseball team and promote baseball in the community after concluding the organization is a for-profit enterprise that does not operate primarily for exempt purposes.     [LTR 201907009; 10/24/2018, rel. 2/15/2019]   Individual Liable for Penalties for Timeshare Donation Scam A U.S. district court, granting the government summary judgment, held that an individual who promised tax savings to individuals who donated their timeshares to a tax-exempt entity that he created based on his inflated appraisals of the timeshares is liable for penalties under section 6700. The court held that the penalty amounts remain in dispute. [James Tarpey; USDC MT Butte Div., No. 2:17-cv-00094, 3/19/2019]   Pilot’s Deductions for World War II Fighter Plane Denied The Tax Court held that a pilot wasn’t entitled to deductions in excess of the income he received for the restoration and maintenance of a World War II fighter plane because his activities were not for profit and he wasn't entitled to other unsubstantiated deductions. Also, the court held that the IRS didn’t meet its burden under section 6751 regarding penalties. [Edward G. Kurdziel Jr.; T.C. Memo. 2019-20, 3/21/2019]
Lynn Nichols Federal Tax Update Podcast March, 20 2019, Episode 35 Listen as Lynn Nichols provides commentary on 10 Items pertaining to current developments in U.S. tax law.  IRS Open to Additional Guidance on Portions of 199A Nothing about the proposed real estate rental property safe harbor is set in stone, and further guidance on other one-off issues related to the passthrough deduction is a possibility, IRS officials said March 8. [Tax Notes Today; 3/11/2019, Article by Eric Yauch] Practitioners Call for 199A Soft Guidance, Safe Harbor Fix Practitioners are welcoming IRS signals that it may reconsider its positions on the passthrough deduction rental safe harbor, saying the safe harbor isn't helpful. [Tax Notes Today; 3/15/2019, Article  by Eric Yauch]   Court Dismisses Challenge to IRS Levy on Social Security Benefits A U.S. district court dismissed an individual’s challenge to the IRS’s levy on 100 percent of his Social Security benefits to collect his $20 million tax debt, finding that the suit is barred by the Anti-Injunction Act and the individual didn’t show that any exception to the act applies; the court denied as futile his request to amend the complaint. [Edward J. Holland Jr.; No. 2:17-cv-13926, 3/7/2019]   Fact Sheet Outlines TCJA Changes for Businesses The IRS has released a fact sheet (FS-2019-3) summarizing tax law changes under the Tax Cuts and Jobs Act that affect businesses and provides resources to help business owners track down details specific to their concerns, noting that most of the changes took effect in 2018 and will affect returns filed in 2019. [FS-2019-3, 3/8/2019]   Insurance Agents Group Denied Exemption The IRS denied tax-exempt status to a group of insurance agents seeking exemption as a business league because the organization operates to benefit a specific insurance company rather than to improve the business conditions of insurance agents in general. [LTR 201906014; 11/16/2018, rel. 2/8/2019]   Retroactive Social Security Benefits Stymie ACA Credit Claim A lump-sum payment of retroactive Social Security benefits must be included in income for purposes of determining eligibility for the Affordable Care Act’s premium tax credit, the Tax Court has held. [Tax Notes Today; 3/12/2019, Article by Kristen Parillo] Election Doesn’t Protect Against Liability for Excess ACA Credits The Tax Court, sustaining an IRS determination, held that an individual’s modified adjusted gross income under section 36B to determine his eligibility for advance premium tax credits under the Affordable Care Act included all the Social Security benefits he received in that year despite a section 86(e) election to exclude a lump sum payment for the prior year. [Levon Johnson; 152 T.C. No. 6, 3/11/2019]   Entity-Level Taxes Likely a Safer Bet for SALT Workarounds Entity-level taxes used as state and local tax deduction cap workarounds are likely better able to withstand scrutiny than the creation of charitable funds, according to a practitioner. [Tax Notes Today; 3/13/2019, Article by Andrea Muse]   Ninth Circuit Affirms Reduction of Estate's Charitable Deduction The Ninth Circuit affirmed a Tax Court decision that sustained a tax deficiency and accuracy-related penalty against an estate, finding that the Tax Court properly upheld the IRS’s reduction of a charitable deduction from the value of the property at the time of death because post-death events decreased the value of property actually given to the charity. [Victoria E. Dieringer et al.; CA 9, No. 16-72640, 3/12/2019]   Power of Attorney, Extension Forms Fail to Update Address With IRS The Tax Court, dismissing a deficiency case for lack of jurisdiction, held that forms a couple sent to the IRS with their new address after they had filed a return with their old address didn’t provide clear and concise notification of a different address. [Damian K. Gregory et ux.; 152 T.C. No. 7, 3/13/2019]   Court Won’t Dismiss Former S Corp Shareholder’s Suit for Breach A U.S. district court refused to dismiss a former S corporation shareholder’s suit against the remaining shareholders for breaching an agreement by refusing to agree to a section 1377 election to split the S corporation’s tax year into two years according to the date his interest was terminated, which resulted in his owing additional taxes. [Thomas S. Manfre v. David G. May et al.; USDC N Ill E Div., No. 1:18-cv-02184, 3/12/2019]   IRS Removes Reporting Requirement for Audit Regime Reps The IRS has scaled back the amount of information individuals serving as partnership representatives under the audit regime must disclose on partnership returns. [Tax Notes Today; 3/15/2019, Article by Eric Yauch]
Lynn Nichols Federal Tax Update Podcast March, 14 2019, Episode 34 Listen as Lynn Nichols provides commentary on 7 Items pertaining to current developments in U.S. tax law. 
Lynn Nichols Federal Tax Update Podcast March, 07 2019, Episode 33 Listen as Lynn Nichols provides commentary on 8 Items pertaining to current developments in U.S. tax law. This week’s topics include: Organization Is Denied Tax-Exempt Status The IRS denied tax-exempt status to an organization formed to develop programs to enrich and uplift the socio-economic well-being of its members, concluding that its organizing document doesn’t limit the organization to charitable purposes and its activities consist of serving the private interests of its members. [LTR 201904015; 11/1/2018, rel. 2/25/2019]   Medical Corporation Denied Exempt Status The IRS denied tax-exempt status to a professional corporation formed by a public charity for the business purpose of practicing medicine, concluding that it was not organized for one or more exempt purposes. [LTR 20190401; 10/31/2018, rel. 2/25/2019]   Supreme Court Says No to 3 Tax Challenges The Supreme Court recently rejected petitions challenging excise taxes, the IRS’s use of John Doe summonses, and deductions denied for horse-related activities. [Tax Notes Today; 2/26/2019, Article by Patrice Gay]   Court Holds Estate Beneficiaries Liable for Unpaid Estate Tax A U.S. district court, granting the government summary judgment, held that beneficiary family members are liable for an estate’s unpaid tax liability because the undisputed facts show that each individual received property includable in the gross estate and that the federal estate tax was not paid when due. [U. S. v. Donna Ringling et al.; USDC SD S Div., No. 4:17-CV-04006, 2/21/2019]   IRS Releases Revised Audit Technique Guide on Foreclosures, Debt Cancellation The IRS has revised an earlier audit technique guide for examining cases involving real estate foreclosures and cancellation of debt income. [Real Estate Property Foreclosure and Cancellation of Debt Audit Technique Guide, 2/22/2019, Revising 3/11/2015]   Application and Sequence: Limiting Business Loss and Interest Richard Joslin explains how the new business loss and interest expense imitations work in tandem and affect other code provisions. [Tax Notes Today; 2/27/2019, Article by Richard Joslin]   Fact Sheet Outlines TCJA Changes Affecting Individuals and Families The IRS has released a fact sheet (FS-2019-2) outlining changes made by the Tax Cuts and Jobs Act, including changes affecting small business taxpayers and changes to withholding, deductions, benefits for dependents, the alternative minimum tax, and retirement plans. [FS-2019-2; 2/26/2019,   IRS Releases Practice Unit on Self-Employment Tax and Partners The IRS released a practice unit on when an individual partner’s distributive share of income is subject to self-employment tax, noting that the unit applies to all arrangements that are treated as partnerships for federal tax purposes. [PST/C/366_01_01-01; 26 Page Slide Show]
Lynn Nichols Federal Tax Update Podcast February, 20 2019, Episode 32 Listen as Lynn Nichols provides commentary on 7 Items pertaining to current developments in U.S. tax law. This week’s topics include: Split Circuit Court Affirms Partnership’s Fee Awards The government can be ordered to pay attorney fees under the qualified offer rule in a partnership proceeding under the 1982 Tax Equity and Fiscal Responsibility Act, the Federal Circuit held. [Tax Notes Today; 2/11/2019, Article by Stephanie Cummings]   Federal Circuit Affirms Award of Litigation Costs to Partnership The Federal Circuit affirmed a Court of Federal Claims decision that awarded a partnership litigation costs under section 7430 in its challenge to an untimely notice of final partnership administrative adjustment, holding that the partnership qualified as the prevailing party, that the amount of tax liability was in issue, and that the partnership incurred litigation costs. [BASR Partnership et al. v. U.S.; Fed Cir, No. 17-1925, 2/8/2019]   DOJ Alerts Federal Circuit to Tax Court Order Related to Appeal The government, in its appeal of a Court of Federal Claims decision that awarded litigation costs to a partnership, alerted the Federal Circuit to a recent Tax Court order that disagreed with the Court of Federal Claims and held that the qualified offer rule in section 7430 did not apply in a partnership proceeding because the amount of tax liability was not in issue. [HURFORD INVESTMENTS NO. 2, LTD., HURFORD MANAGEMENT NO. 2, LLC,       Eleventh Circuit Affirms Conviction for Making False Claim to IRS The Eleventh Circuit, in an unpublished per curiam opinion, upheld an individual’s conviction for making a false claim to the IRS and corruptly impeding the administration of the internal revenue laws, finding that there was sufficient evidence that she fraudulently obtained a refund and moved the proceeds to evade detection and recovery by the IRS. [U. S. v. Ingrid McBride Rich; CA 11, No. 17-15767, 2/12/2019]   Florida Tribe Seeks Review of Decision Holding Distributions Taxable The Miccosukee Tribe of Indians of Florida petitioned the Supreme Court for review of an Eleventh Circuit decision that held that distribution payments a tribe member received from the tribe’s gaming activities are not exempt from taxation, arguing that the payments were exempt as Indian general welfare benefits. [Miccosukee Tribe of Indians of Florida v. United States;   CA 11, No. 18-395, 1/7/2019]   IRS Addresses Bonus Depreciation Anomaly for Luxury Autos The IRS has outlined procedures that will allow passenger car owners eligible for bonus depreciation to deduct depreciation during the recovery period that they wouldn’t otherwise have been able to. [Tax Notes Today; 2/14/2019, Article by Emily Foster]   IRS Provides Safe Harbor for Autos Eligible for Bonus Depreciation The IRS has issued guidance (Rev. Proc. 2019-13) providing a safe harbor accounting method for determining depreciation deductions for passenger automobiles that qualify for the 100 percent additional first-year depreciation deduction under section 168(k) and that are subject to the depreciation limitations under section 280F(a). [Rev. Proc. 2019-13; 2019-9 IRB 1, 2/13/2019]   AICPA Seeks Small Business Relief From Tax Shelter Definition The American Institute of CPAs has asked that small businesses meeting specified conditions be excluded from the definition of a tax shelter so that they can obtain the benefits of the simplifying provisions of the Tax Cuts and Jobs Act. [Letter Re: Small Business Relief from Definition of Tax Shelter, AICPA 2/13/2019]   IRS Now Asking About Negative Partnership Tax Capital Accounts The IRS’s ongoing interest in partners with negative tax basis capital accounts in partnerships has resulted in new instructions for filling out partnership tax returns. [Tax Notes Today; 2/15/2019, Article by Nathan Richman]   Individual Entitled to Alimony Deduction for Arrearages Paid The Tax Court held that an individual was entitled to an alimony deduction for alimony arrearages he paid to his former wife after a state court ordered him to do so or go to jail, finding that the arrearages maintained their character as alimony and were paid under a contempt order, not a money judgment as the IRS claimed. [Jeffrey Siegel; No. 27572-16; T.C. Memo. 2019-11]  
Lynn Nichols Federal Tax Update Podcast February, 06 2019, Episode 31 Listen as Lynn Nichols provides commentary on 3 Items pertaining to current developments in U.S. tax law. This week’s topics include: S Corporation Denied Deduction for Energy Efficient Buildings A U.S. district court granted the government summary judgment in a suit seeking the return of erroneous refunds it made to a couple, finding that their electrical contracting S corporation wasn’t entitled to deductions under section 179D for energy efficient commercial building property because the buildings were not placed in service in the year they claimed. [United States v. Dennis F. Quebe et ux.; No. 3:15-cv-00294, 1/25/2019]   Fifth Circuit Vacates Late-Filing Penalty Decision for Government The Fifth Circuit vacated a district court decision that held that a couple’s reliance on their accountant to e-file their return didn’t provide reasonable cause for their late filing and granted the government summary judgment, finding that there is a genuine dispute of material fact regarding whether the accountant’s actions met the reasonable cause standard. [Christopher A. Haynes; CA 5; No. 17-50816, 1,29,2019]   Tax Court Allows Partnership's $2.9 Million Worthless Debt Deduction The Tax Court held that a partnership was entitled to a $2.9 million worthless debt deduction that the IRS disallowed, finding that there was a bona fide debt owed to the individual who contributed the note to the partnership in exchange for an interest in it and the debt became worthless in the year the partnership claimed the deduction. [2590 Associates LLC et al.; No. 12924-16; T.C. Memo. 2019-3, 1/31/2019]
Lynn Nichols Federal Tax Update Podcast January, 28 2019, Episode 30 Listen as Lynn Nichols provides commentary on 2 Items pertaining to current developments in U.S. tax law. This week’s topics include: Treasury Opts for Taxpayer-Friendly Approach in 199A Regs A new batch of guidance on the section 199A deduction aims to clarify taxpayers’ concerns about an earlier proposal, while also taking a generous approach in expanding the number of businesses that can claim the tax break.  [Tax Notes Today; 1/22/2019, Article by Nathan Richman and Jonathan Curry] Passthrough Regs Clarify Antiabuse Rules for Trusts Treasury is looking to clear up some of the confusion regarding the application of its antiabuse rules to multiple trust arrangements under new section 199A passthrough deduction rules. [Tax Notes Today; 1/22/2019, Article by Jonathan Curry] IRS Issues Guidance Package on Section 199A Passthrough     Deduction The IRS has issued final regulations providing taxpayers with computational, definitional, and antiavoidance guidance on the deduction for qualified business income under section 199A. The regs adopt, with changes, proposed regs (REG-107892-18) issued in August.      [T.D. X?X?X?X; 1/18/2019] Proposed Section 199A Regs Focus on Treatment of REIT Dividends The IRS has issued proposed section 199A regulations (REG-134652-18) on the treatment of previously suspended losses that constitute qualified business income and on the determination of the section 199A deduction for taxpayers that hold interests in regulated investment companies, charitable remainder trusts, and split-interest trusts.     [REG-134652-18; 1/18/2019]      Passthrough Guidance Proposes Safe Harbor for Rental Real Estate Enterprises The IRS has issued a proposed revenue procedure (Notice 2019-7) that provides a safe harbor under which a rental real estate enterprise will be treated as a trade or business solely for purposes of section 199A and concurrently issued final regulations.     [Notice 2019-7; 1/18/2019]     Passthrough Guidance Provides Methods for Calculating W-2                            Wages The IRS has issued a revenue procedure (Rev. Proc. 2019-11) providing three methods for calculating W-2 wages for purposes of section 199A(b)(2) and (7) and concurrently issued final regulations.     [Rev. Proc. 2019-11; 1/18/2019]   Warren Proposes New Tax on Wealthiest Americans Americans with more than $50 million in assets would pay a new tax under a proposal from Sen. Elizabeth Warren, D-Mass. [Tax Notes Today; 1/24/2019, Article by Asha Glover]
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